County of Moultrie v. Rockingham Ten-Cent Savings Bank - 92 U.S. 631 (1875)
U.S. Supreme Court
County of Moultrie v. Rockingham Ten-Cent Savings Bank, 92 U.S. 631 (1875)
County of Moultrie v. Rockingham Ten-Cent Savings Bank
92 U.S. 631
1. An act of the General Assembly of the State of Illinois approved March 28, 1869, authorized the Board of Supervisors of Moultrie County to subscribe to the stock of the Decatur, Sullivan & Mattoon Railroad Company to an amount not exceeding $80,000 and to issue bonds therefor when the road should be opened for traffic between the City of Decatur and the Town of Sullivan. In December, 1869, the board of supervisors ordered that a subscription to the stock of that company in the sum of $80,000 be made by the county and that in payment therefor, bonds payable to said company should be issued and delivered to it when the road should be so open for traffic. No subscription was actually made on the books of the company, but its president and clerk entered of record the resolution of the board of supervisors, and the company, by a contract made April 15, 1870, appropriated the bonds that would be received in payment of that subscription. The bonds were delivered to the company and the road was so open to traffic early in 1873. By the constitution of the state, which took effect July 2, 1870, counties were prohibited from subscribing to the capital stock of any railroad or private corporation, or from making donations to or loaning their credit in aid of such corporations. Held that whether the action of the board in December, 1860, be in substance and legal effect a subscription, or only an undertaking to subscribe which was accepted by the company, a valid contract existed between the county and the company which, when the new constitution took effect, authorized the subsequent delivery of the bonds.
2. The board of supervisors, acting under the authority of the act in question, could bind the county by a resolution which, in favor of private persons interested therein, might, if so intended, operate as a contract, and the obligation thereby assumed would continue in force after July 2, 1870, although the power to enter into such a contract was after that date withdrawn.
3. The holder of the bonds purchased them before their maturity, and without notice of any defense. They recite that they are issued by the county in pursuance of the subscription of the capital stock of said company, made by the board of supervisors of the county, December, 1860, in conformity to the provisions of an act of the general assembly above mentioned. The purchaser was thus assured that the subscription was made when they had authority to make it, and it would be tolerating a fraud to permit the county, when called upon for payment, to set up that it was not made until after July 2, 1870, when their authority had expired.
4. The Constitution of a state cannot impair the obligation of a contract, but the Constitution of Illinois declares that the contracts of bodies corporate shall continue to be as valid as if it had not been adopted. The power to subscribe carried with it authority to issue bonds for the sum subscribed, and, the subscription being valid, the bonds are equally so.
The facts are stated in the opinion of the Court.